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Private label sales hurting branded labels

It was inevitable during the Great Recession. We became more price-conscious. We made the move from our favorite brands to lower-cost private labels.

And as the grocery stores, convenience stores and other bettered the quality of their private label items, we discovered that the switch really isn’t so bad.

Sedano's, the Miami-based Latin-oriented supermarket, has expanded its private-label Sedano's line from just two products (bottled water and sugar) in 2007 to 50 in 2009 --- with another 80 in the pipeline.

But while this trade-down has been good for our wallets — the Private Label Manufacturers Association found that consumers who bought store brands instead of name brands save an average of 35 percent — it’s not so good for some of those brands we’ve known and loved for so long.

Most recently, Dean Foods, the nation’s largest dairy processor, announced that it will cut up to 400 jobs amid falling share prices and a 43 percent drop in first-quarter profit.

The company said it’s been seeing brutal competition from private labels, who are selling milk at a loss in order to bring consumers into stores. Dean Foods’ chief executive noted that, in some markets, a half-gallon of his branded milk cost more than a gallon of rival non-branded product.

Equity research firm Consumer Edge Research did a survey of 2,500 consumers about their private-label brand usage and found that a number of well-known companies are at risk from pressure from private labels.

In its April report, the company found that Dean Foods, McCormick, Newell Rubbermaid, Clorox, Kraft, Kellogg, Sara Lee and Campbell were among the companies most at risk from consumer acceptance of similar non-branded products.

Other companies, such as Hershey, beer and wine companies and tobacco companies, were less at risk because consumers were less likely to trade to private label in those industries.

Where do you buy private labels, and in what instances do you insist on a branded product? Post a comment below!